Being a savvy investor requires you to pursue any and all available options. To this end, trading futures contracts can be an excellent option. Unfortunately, you may be misinformed when it comes to this type of investment, which can cause you to believe some relatively routine misconceptions concerning this type of trading. By dispelling the following myths concerning trading, you should be in a better position to make wise investment choices when it comes to your money.
Myth: Trading Futures Is Only For Large Investors
There is a frequently held misconception that trading future contracts is only for large investors. However, the creation of E-Mini futures contracts has opened this type of investing to investors with small and medium amounts of capital to use.
Essentially, these contracts are almost identical to standard futures contracts, but they deal with much smaller lot sizes. This allows you to make investments in the commodities that you think are profitable without needing to invest your entire portfolio. Unfortunately, futures contracts can be extremely complicated, and if you have never undertaken this type of investing before, you may want to consult with your financial advisor to determine whether or not this is a good fit for your investment needs.
Myth: You Must Have A Broker To Trade Futures
A broker can dramatically reduce the amount of work that you must do to trade, but they can charge rather steep fees. This is particularly true for standard futures contracts because they deal in very large amounts of money, and the brokerage fees can be rather large when making these trades.
When you are trading with E-Mini contracts, you can avoid the need to have a broker. This stems from the fact that the markets for these contracts are managed electronically, which will allow anyone with an internet connection to issue buy and sell orders. While online brokerage services still charge a fee per order, their percentages are often drastically lower than traditional brokerage firms.
Trading E-Mini futures contracts can be an excellent option for small and medium investors who are looking to diversify their portfolios. However, this type of investing is often poorly understood by new investors, and making sure that you understand that E-Mini contracts are geared to small and medium investors as well as the fact that you can trade these contracts without needing a broker will allow you to have a better understanding about whether this option is suitable to your needs and investing style.
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